In the Indochina Peninsula where the military situation had
been stalemated between Government and Communist forces since 1973, the old
regimes in Cambodia and South Vietnam fell in April as the result of Communist
military offensives mounted since the beginning of the year. Two factors that
can be cited as causing the drastic change in the situation in South Vietnam
were North Vietnam's firm maintenance of its aim to realize the target of
unifying Vietnam under its established policy, even after concluding the Paris
Agreement (in 1973), and also the loss of military balance between South Vietnam
Government forces and Communist forces which resulted from a sudden loss of
interest in Indochina on the part of the people and the Congress of the United
States, the latter consequently restricting aid to South Vietnam.

In August, Communist rule was established in Laos, and the countries of
Indochina moved rapidly along the road to socialism. Their progress was not
necessarily uniform, and the diverse nature of their respective external
policies stood out in the midst of the complicated international environment.

(2) Response of Southeast Asian Countries to the New Situation

The countries of Southeast Asia responded in a variety of ways to the
changes in the Asian situation in 1975, the drastic change in the Indochina
situation being the climax. These responses included (i) efforts to normalize
relations with the countries of Indochina, such as recognition of the
Provisional Revolutionary Government of South Vietnam by Burma, Malaysia and
Indonesia, and the normalization of relations between Thailand and Cambodia; (ii) improvement of relations with China, including the establishment of
diplomatic relations with China by Thailand and the Philippines and visits to
China by Burmese leaders; (iii) moves on the part of Thailand and the
Philippines to review their relations with the United States; and (iv) the
continued efforts of the Philippines, the only ASEAN member country that had no
diplomatic relations with the Soviet Union, toward the establishment of
diplomatic relations with that country. A number of countries began to attach
greater importance to measures for further strengthening their social and
economic foundations in order to cope with the changed situation in which a
unified Vietnam was about to emerge as a strong nation in Southeast Asia and to
increase their own resilience as national entities. The ASEAN countries, in
particular, aimed at a further strengthening of their solidarity and to this end
held their first summit talks in Indonesia in February 1976.

(3) Developments in the Korean Peninsula

Although it was feared that the new situation in the Indochina Peninsula
might affect the situation in the Korean Peninsula, due in part to North Korean
Chairman Kim Il-song's visit to China amid the drastic change in the situation
in Indochina, there was no basic change throughout 1975 and the North-South
dialogue in effect remained suspended without progress. North Korea conducted
active diplomatic activities in a confident manner, with emphasis on approaches
to non-aligned countries. To counter the North Korean moves, the Republic of
Korea also undertook a vigorous line of activities. In the U.N. debate on the
Korea question, an unusual situation arose when the countries supporting the
Republic of Korea and those supporting North Korea were equally matched and the
resolutions presented by both sides were adopted.

Domestically, the Republic of Korea endeavored to strengthen its national
defense to cope with the drastic change in the Indochina situation and Chairman
Kim II-song's visit to China. The economy of the Republic of Korea began to show
signs of recovery in the latter half of 1975.

North Korea was confronted with such economic difficulties as a slowdown in
economic growth and a worsening of its balance of international payments
throughout 1975.

(4) Policies of the United States, China and the Soviet Union toward Asia

China and the Soviet Union intensified their approaches to Asian countries
after the drastic change in the Indochina situation, and the Sino-Soviet rivalry
in Asia expanded further.

The United States repeatedly emphasized that its basic policy of maintaining
a positive interest in Asia and strictly observing its existing commitments
remained unchanged, even after the drastic change in the Indochina situation.
The United States strengthened its stand of attaching great importance to its
partnership with Japan. This U.S. policy toward Asia was reaffirmed by the "new Pacific
doctrine" announced by President Gerald Ford in December.

(5) Situation in Oceania

In Australia and New Zealand, the Conservatives took over the reins of
government from the Laborites toward the end of 1975. Both countries continued
efforts to develop closer relations with the countries of Asia. In September,
Papua New Guinea achieved independence, and moves aimed at gaining independence
were seen in non-self-governing territories in the South Pacific.

2. Developments in Relations among the Big Powers

(1) U.S.-Soviet Relations

In U.S.-Soviet relations in 1975, the emergence of points of basic difference
as well as conflicts of interests regarding specific problems were more
conspicuous than was cooperation, and U.S.-Soviet relations remained rather
stagnant on the whole.

Despite the expectation that the Strategic Arms Limitation Talks (
SALT-II ),
which comprise the basis of U.S.-Soviet cooperation, would be concluded within
1975 on the basis of the agreement reached in the Ford-Brezhnev talks in
Vladivostok toward the end of 1974, a final adjustment in the points of
difference between the two sides was not reached. General Secretary Leonid I.
Brezhnev's planned visit to the United States was not realized in 1975.

As regards economic relations, the United States in December 1974 enacted an
amendment to the Export-Import Bank Act, by which the problems of providing
most-favored-nation treatment and extending credit to the Soviet Union were
linked with the emigration problem of Soviet Jews. Dissatisfied with this, the
Soviet Union informed the United States, in January 1975, that it would not put
into effect the U.S.-Soviet Trade Agreement. Conclusion of the U.S.-Soviet
long-term grain agreement, in October, was a noticeable event in the general
stagnant trend of U.S.-Soviet economic relations. However, the U.S.-Soviet
confrontation over the Angola problem exerted a delicate influence on SALT-II,
and U.S.-Soviet relations failed to show any signs of substantial progress even
after the 25th Soviet Communist Party Congress in February 1976.

(2) U.S.-China Relations

The United States and China, on the occasion of President Ford's visit to
China in December, reaffirmed their intention to promote bilateral relations in
accordance with the Shanghai Communique of 1972. No substantial progress was
seen in their talks on the Taiwan problem throughout 1975, except that the
number of American troops stationed in Taiwan continued to decline. However, it
seems that factors of conflict between them have decreased as a result of the
drastic change in the Indochina situation, and that there has emerged a
situation in which both countries can exchange frank views on a wide range of
problems of mutual concern. The U.S. attitude of attaching importance to its
relations with China was also stressed by President Ford in his speech on the "new Pacific
doctrine" (in December).

(3) Sino-Soviet Relations

In their bilateral relations, China and the Soviet Union maintained working
relations, to a limited degree, throughout 1975 in such areas as trade and civil
aviation. However, their basic conflict at party and political levels showed no
signs of improving. China made clear its anti-Soviet attitude in its new
Constitution and in a political report approved by the Fourth National People's
Congress in January. The Soviet Union also assumed a stance of direct opposition
to the Chinese attitude, and the Brezhnev report to the 25th Soviet Communist
Party Congress in February 1976 severely criticized the Chinese leadership. The
conflict between the two countries is not limited to merely bilateral issues,
but has come to involve their relations with the United States, Europe, Japan
and other countries, with both sides mutually intensifying denunciations and
attempts to check each other's moves. The two countries actively approached
countries in Asia and Africa in recognition of the growing importance of these
countries in the arena of international politics. This has led to a conspicuous
degree of competition for influence between the two countries.

(4) Domestic Situations in the United States, China and the Soviet Union

In the United States, the Ford Administration endeavored to restore the
confidence of the people and Congress in the Administration in the wake of the
Watergate affair. However, the implementation of its policies tended to be
restricted by Congress. As regards the economic recovery which was a matter of
primary concern to the American people amid the serious global recession, the
U.S. economy headed toward recovery, ahead of the economies of other countries,
in the second quarter of the year. Domestic politics began to move in the middle
of the year toward the 1976 Presidential election and President Ford and other
Presidential hopefuls gradually intensified their election activities.

In China, the Fourth National People's Congress held in January 1975 approved
the new Constitution and a reshuffle of the State Council, and set forth a
policy line for the modernization of the country from a long-range point of view.
Later, an active campaign was conducted against the revival of revisionism,
including the criticism of Shui Hu Chuan (Water Margin) and the controversy over
education. The campaign developed into an organized criticism directed against "capitalist
roaders," which in turn came to bead dressed to the core
of the basic policy lines of the Government, following the death of Premier Chou
En-lai in January 1976. This, in its turn, gave rise to a series of moves
including the appointment of Hua Kuo-feng as Acting Premier in February 1976,
the fall of Deputy Premier Teng Hsiao-ping, and the appointment of Hua Kuo-feng
as First Vice Chairman of the Party and Premier in April. Despite such changes
in the domestic situation, there was no major change in the basic policy line
set by the Fourth National People's Congress.

In the Soviet Union, General Secretary Brezhnev's administration tried to
further strengthen its leadership structure through the removal of Politburo
member Shelepin (in April 1975). However, the Soviet economy as a whole remained
stagnant as a result of the poor level of agricultural production, although the
ninth five-year plan managed to achieve the lower limit of the target set for
industrial production. The 25th Party Congress (held from February 24to March 5,
1976) was carefully noted because of the economic slump and also because of
speculation about General Secretary Brezhnev's health. However, the Congress
positively assessed the Brezhnev external policy line since the 24th Party
Congress and decided that it should be continued. It also acted upon various
domestic measures to help develop the Soviet economy with emphasis on
agriculture.

3. Moves for Stabilization of the International Economy

(1) Problems after the Oil Crisis

The developed countries in general faced a
recession accompanied by inflation in the wake of the oil crisis which occurred
in the autumn of 1973. The OECD member countries posted an average minus growth
of two per cent for 1975, and world trade showed an evident decrease in 1975 due
to the simultaneous recession in many countries.

Terms of trade worsened for the developing countries, except some
oil-producing countries, due to the effect of the economic slump in the
developed countries, and the flow of development aid and private funds from the
developed countries failed to increase. As a result, many developing countries
were faced with serious economic difficulties and international payments
problems. Against such a background, the developing countries gradually
strengthened a sense of solidarity among themselves, encouraged by the marked
increase in the international voice of the oil-producing countries as the result
of their oil strategy, and from this endeavored to strengthen their negotiating
power against the developed countries regarding primary commodities,
natural resources and other issues. In this connection, proposals
for anew international economic order, advantageous to the developing countries,
were reaffirmed in various international forums, such as the Conference of
Developing Countries on Raw Materials in Dacca in February, and the Conference
of the Foreign Ministers of Non-aligned Countries in Lima in August.

(2) International Cooperation for the Solution of Difficulties

Faced with serious structural problems in the international economy, various
countries recognized anew in1975 that they were mutually interdependent in the
sphere of the international economy, and reconfirmed the need for international
cooperation among the developed countries and also between the developed and the
developing countries to solve such problems. Concrete indications of this
renewed awareness of the world economic setting can be seen in the Summit
Conference of Six Nations at Rambouillet (in November) comprising the major
developed countries, the atmosphere of the North-South dialogue on the occasion
of the Seventh Special U.N. General Assembly (in September) and the Conference
on International Economic Cooperation (in December) and the OPEC countries' more
discreet attitudes than before toward raising oil prices.

(3) Developed Nations' Efforts for Economic Recovery

Japan, the United States and the countries of Europe tried to stimulate their
economies, partly out of recognition that the revival of their economic activity
would exert a great influence on the recovery of the world economy. As a result,
the economy began to recover in the United States around spring. In a few other
developed countries, economic activity had also started to show signs of
recovery by the end of 1975.

It can be said that the trend of the international economy toward instability
since the oil crisis was stemmed and the worst was averted as the result of
various efforts for international cooperation and the emergence of signs of
economic recovery in the developed countries.

4. Moves for the Establishment of a New Law of the Sea

(1) Efforts have been made in recent years to establish a
new legal order of
the sea, amid demands from coastal countries for the extension of areas under
their jurisdiction, rapid progress in technology for the development and use of
ocean resources, and the growing pollution of the sea. In 1975,the third session
of the Third Conference on the Law of the Sea, which was opened in late 1973
with a view to drafting a new and consolidated treaty on the law of the sea, took
place in Geneva (from March until May).

(2) The Conference held informal discussions during the session, and on the
last day of the session, the Conference chairman presented an informal
negotiating text based on the debate. This text proposed (1) the establishment
of 12-nautical mile territorial waters, an arrangement that would allow freer
navigation in strait areas used for international navigation than in ordinary
territorial waters and (2) the establishment of an economic zone over 200
nautical miles from shore, where the littoral state could exercise its
sovereignty over fish and other natural resources. It also provided for the
solution of a wide range of problems concerning the sea, including the
continental shelf, the development of natural resources on the seabed and the
prevention of marine pollution. Although the draft was informal, it formed the
basis for debate at the fourth session (the New York spring session) of the
Third Conference on the Law of the Sea in the spring of 1976 and played a major
role in facilitating negotiations.

5. Developments by Region (except Asia)

(1) Western Europe

West European countries in 1975 continued to experience a very difficult
economic situation carried over from the previous year. Efforts were
concentrated on solving economic difficulties with attempts being made to
coordinate national economic policies. Despite the economic difficulties, many
European countries, including the United Kingdom, France, and the Federal
Republic of Germany, maintained political stability. However, the political
situation looked fluid in South European countries. In Italy, the Communists
made a big gain in local elections. In Portugal, political conditions remained
unclear. In Spain, a new political climate arose as the result of Generalissimo
Franco's death. In U.S.-Europe relations, progress was made in coordinating
respective views on international economic problems due in part to the policy of
the governments of the United States and West European countries of attaching
importance to U.S.-Europe relations. However, a slight difference of opinon was
noted between the United States and Europe regarding ways to cope with the
problem of NATO's southern flank in connection with the fluid situation in
southern Europe mentioned above.

(2) East-West Relations in Europe

The holding of the summit-level Conference on Security and Cooperation in
Europe (CSCE) in Helsinki and its approval of the Final Acts served as a
milestone in the process of easing tension in Europe. That the Soviet Union
secured in the Final Act the recognition of the various countries concerned for
a number of principles, including that of the inviolability of borders, was an
achievement for its European diplomacy. On the other hand, the West positively
approved the fact that the possibility of changing borders by peaceful means was
specified and that it did obtain some concessions from the East on confidence-building measures and on the exchange of people and of information.
However, the West considers that the significance of the conference depends on
the implementation of matters agreed upon. In fact, the East later clarified its
basic attitude, stating that there can be no detente in the field of ideology,
and moved to strengthen its unity with Eastern Europe by concluding a new Treaty
on Friendship, Cooperation and Mutual Assistance between the U.S.S.R. and the
German Democratic Republic and holding consultations among East European
leaders. Although negotiations for Mutually Balanced Force Reduction (MBFR) in
Central Europe were continued, no concrete progress was made.

(3) The Middle East

The assassination of King Faisal of Saudi Arabia in March1975 gave rise to a
new state of tension in the Middle Eastern situation. However, Egypt and Israel
concluded an agreement on the second disengagement of troops in the Sinai
Peninsula (the Second Sinai Agreement) in September, amid renewed diplomatic
efforts by the United States for peace in the Middle East and Egypt's approaches
to the West, including the United States. The Second Sinai Agreement, together
with there opening of the Suez Canal, greatly reduced the possibility of another
war breaking out between Egypt and Israel. However, Syria and Israel moved no
further toward opening negotiations for a second disengagement of troops in the
Golan Heights. On the other hand, the Palestine problem received further
attention as a key to peace in the Middle East. Although no substantial progress
was made in resolving this problem in 1975, the Palestine Liberation
Organization's (PLO) international position rose through the adoption of related
resolutions by the U.N. General Assembly and the invitation of the PLO to a
Security Council debate on the Middle East problem. In Lebanon, the
confrontation and dispute between the Christians and Moslems was further
intensified as no final solution was found, and the continuing armed clashes
added to the instability of the Middle Eastern situation.

(4) Africa

In Africa, the moves toward gaining independence on the part of
non-self-governing territories, which had begun in 1974, continued in 1975.
Mozambique, Cape Verde and Sao Tome and Principe achieved independence from
Portugal, and the French Comoros unilaterally declared its independence. In West
Sahara, Morocco and Mauritania each claimed sovereignty to the area, as a result
of which these two countries and Spain concluded a tripartite agreement.
However, Polisario, a national liberation organization in West Sahara, declared
the independence of the area in February1976, and the confrontation among the
countries concerned over title to the area continues.

In Angola, where Portuguese rule ended (in November), two liberation movement
groups, ie, the Popular Movement for the Liberation of Angola (MPLA) and the
coalition of the National Front for the Liberation of Angola (FNLA) and the
National Union for the Total Independence of Angola (UNITA), issued declarations
of independence, each claiming to be the nation's government. In the civil war
that ensued, the MPLA brought most of Angola under its control in February1976,
and many countries came to recognize the MPLA as the national government,
thereby bringing the civil war to an end. Both the African countries which
feared intervention by major powers, and the United States and the countries of
Europe, which were watching the moves of the Soviet Union, were not a little
shocked by the fact that the MPLA received strong support from the Soviet Union
and Cuba. The South African Government continued its efforts throughout 1975 to
ease tensions with other African countries, while the moves of the white
regime in Southern Rhodesia toward having talks with black liberation
organizations failed to achieve the expected results.

(5) Central and South America

Central and South American countries have tried
in recent years to achieve economic independence and move away from their
excessive dependence on the United States, a trend which continued in 1975. The
establishment in October of the Latin American Economic System (Sistema
Economico de America Latina-SELA), an organization for regional cooperation which
includes Cuba but excludes the United States, was one such effort. The new
dialogue policy of the United States was suspended because of the objections
raised by Central and South American countries to the new Trade Act of the
United States in early 1975. In February 1976, U.S. Secretary of State Henry
Kissinger visited six Central and South American countries to seek new relations
with those countries. The political situation in Central and South American
countries generally was quiet, although there were changes of government in Peru
and Ecuador and political instability in Argentina (where a military
administration was reinstated in a coup d'etat in March 1976).

6. Increased Influence of Developing Countries in the United Nations

The developing countries account for an overwhelming majority of all
U.N. member nations, and their tendency to act as a group of non-aligned
countries, or the Group of 77, to demonstrate their numerical strength in such
forums as the U.N. General Assembly became more conspicuous in 1975. The
adoption of a resolution criticizing Zionism despite strong opposition from the
United States and the countries of Europe can be regarded as an event symbolic
of the growing political voice of the developing countries.

Amid the growth of their influence, however, members of the
non-aligned group
revealed that they were not of the same opinion regarding certain problems.
Their dialogue with the developed countries progressed gradually as was seen on
the occasion of the Seventh Special General Assembly.